What is the difference between commercial and investment banking?

Commercial banking and investment banking serve different purposes within the financial system. Commercial banks focus on deposit-taking, offering savings and current accounts, and providing loans and credit facilities to individuals and businesses. Their services cater to day-to-day financial needs and promote economic activity by supporting trade, consumption, and small business growth. Investment banks, on the other hand, specialize in capital markets, helping corporations raise funds through issuing stocks and bonds, advising on mergers and acquisitions, and managing large-scale investments. While commercial banks generate income mainly through interest on loans, investment banks earn from advisory fees, underwriting services, and trading activities. Both sectors are regulated differently and cater to distinct client needs.